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The spread of capitalism worldwide has made people wealthier than ever before. But capitalism's future is far from assured. The global financial meltdown of 2008 nearly produced a great depression. Economies in Europe are still teetering. Income inequality, resource depletion, mass migrations from poor to rich countries, religious fundamentalism--these are just a few of the threats to continuing prosperity. How can capitalism be sustained? And who should spearhead the effort? Critics turn to government. In Capitalism at Risk, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine argue that while governments must play a role, businesses should take the lead. For enterprising companies--whether large multinationals, established regional players, or small start-ups--the current threats to market capitalism present important opportunities. Capitalism at Risk draws on discussions with business leaders around the world to identify ten potential disruptors of the global market system. Presenting examples of companies already making a difference, the authors explain how business must serve both as innovator and activist--developing corporate strategies that effect change at the community, national, and international levels. Filled with rich insights, Capitalism at Risk presents a compelling and constructive vision for the future of market capitalism.

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One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change. Why is it that established companies invest aggressively--and successfully--in the technologies necessary to retain their current customers but then fail to make the technological investments that customers of the future will demand? The fundamental reason is that leading companies succumb to one of the most popular, and valuable, management dogmas: they stay close to their customers. To remain at the top of their industries, managers must first be able to spot disruptive technologies. To pursue these technologies, managers must protect them from the processes and incentives that are geared to serving mainstream customers. And the only way to do that is to create organizations that are completely independent of the mainstream business.

learning objective:

To understand the characteristics of disruptive innovations--those that change an industry--and learn to create a competitive edge by developing disruptive technologies.

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In 2010, Tom Linebarger, president and COO of Cummins, Inc., the Columbus, Indiana-based manufacturer of diesel engines, has to decide where to locate the company's new manufacturing line for high horsepower engines. He has three choices to decide from: Seymour, Indiana; Daventry, England; and Pune, India. The Community Education Coalition (CEC) in Columbus has had success in improving the city's schools to make the area more competitive in attracting and retaining highly educated employees to this small Midwestern city. The CEC is planning an expansion into Seymour with Cummins' help. Will the CEC be able to improve the school system in Seymour enough to make it a viable choice for the new high horsepower engine line? The case highlights the role of Cummins' long-term effort at community development as a key element of its corporate strategy.

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This note describes the market for consumer finance products in the United States. The note focuses on the changes in supply and demand that have occurred since the mid-20th century, and highlights recent approaches to finance for low-credit rated borrowers.

learning objective:

Provide an introduction and background to a module on innovation in consumer finance.

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This note describes the market for healthcare, primarily in the U.S., but also in other parts of the world to the extent that features of the system in particular countries are instructive. It also contains exhibits that display comparative performance of the system in terms of cost and quality. It raises the question of how health care can be delivered with higher quality at lower cost.

learning objective:

Provide an introduction and background to a module on innovation in healthcare.

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This Video Short accompanies this case and can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details.

Vittorio Merloni discusses how he dealt with problems stemming from managing a multi-national European company.

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This Video Short accompanies this case and can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details.

Vittoria Merloni discusses the challenges that lie ahead for his company as well as his own future plans in the aftermath of appointing a young CEO to take on some of his responsibilities.

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To maximize their effectiveness, color cases should be printed in color.

The head of Denmark's largest energy group pondered how to use their limited resources to advance the delivery of clean and reliable energy. The Danish State owned DONG Energy had started life as an importer and trader of gas and oil. Under the leadership of the current CEO, Anders Eldrup, the company had become an energy group, present in all steps of the gas and oil value chain and particular, in the EU market leader in offshore wind energy. As a developer and operator of wind farms, it was one of the world's leaders. In 2011, the company faced several strategic questions including whether and where they should continue investing in offshore wind and how to identify the next key growth businesses of the future.

learning objective:

To examine the strategy and other key policies of a company that has succeeded with off-shore wind.

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The World Bank forecast for the year 2030 provides reason for optimism. The forces of global market capitalism seem to be gathering strength, and long-term prospects show reasonable economic growth. But there are also challenges. As we have already seen, the benefits of growth will not be evenly spread across countries--or even within countries--and collateral damage to the environment will be significant. Scarce resources will be consumed, and the world's climate will continue to change. Can these challenges be dealt with by a "business as usual" approach, or do they represent potentially major threats to market capitalism? In this chapter, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine present what they learned from a number of forum discussions with business leaders from Europe, East Asia, Latin America, and the United States. They also lay out ten potential "disruptors"--forces that could severely disrupt the market system's functioning in the decades ahead. The chapter relies extensively on quotes from forum participants about these disruptors, namely: 1) the financial system; 2) the state of trade; 3) inequality and populism; 4) migration; 5) environmental degradation; 6) failure of the rule of law; 7) public health and general education; 8) the rise of state capitalism; 9) radical movements, terrorism, and war; and 10) evolution and pandemics. The chapter also draws on data from the World Bank and other sources to argue that the global market system is vulnerable to serious breakdown if it continues to operate more or less as it has in the past.

This chapter was originally published as Chapter 3 of "Capitalism at Risk: Rethinking the Role of Business."

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